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railroad employment. The information is supplied by the employee when his application for unemployment benefits and each of his claims for unemployment benefits are completed. When the employee is interviewed by the Board's field service, he is asked for more information about his separation from his employment. Such information is requested in order to determine the employee's eligibility for benefits and in order to make effective placement efforts.

In any case where a discharged employee is reinstated with pay for time lost, the Board may recover all or a part of the benefits paid to him. If the employer has notice of the payment of benefits, the employer must set aside for payment to the Board a part of the pay for time lost equal to the amount of benefits for the period for which time lost is paid. The Board accordingly inquires whether discharged employees are seeking reinstatement and sends their employers notice of benefit payments. Comparison of discharge claims with all claims

A special study of discharge cases in the 1957-58 benefit year disclosed data as to discharge cases which in the following table are compared with comparable data for all unemployment benefit cases for the benefit year:

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CASES IN WHICH CLAIMANT LEFT WORK VOLUNTARILY Statutory provisions

The act provides a disqualification excluding an employee from receiving benefits for 30 days if he voluntarily leaves work without good cause. The period of disqualification begins with the day with respect to which the Board finds that he left work. Administration in voluntary quit cases

Most voluntary quits are reported by claimants on their applications or claims for unemployment benefits. In some cases railroad employers have also reported to Board field offices the identity of claimants who quit work.

When "voluntary quit” is shown on a claim for days within 30 days of the date of the quit, or if the Board learns of it in some other way, the Board field office obtains information concerning the suitability of the work and the reason for the quit. This is in order to determine whether the 30-day disqualification is applicable.

A claimant's reason for voluntarily leaving work often has a bearing on his availability for work and on the prospects of finding work for him. Accordingly, field offices interview claimants who have voluntarily quit their jobs even though they do not claim benefits within 30 days after the date of their quitting. Data on voluntary quit claims

A special study of voluntary quit cases in the 1957-58 benefit year disclosed the following data as to voluntary quit cases :

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Claimants investigated and disqualified were those who claimed benefits within 30 days after the quit and who were found not to have good cause for quitting. Benefits were paid for days of unemployment after the end of the 30-day disqualification period.

Claimants investigated and not disqualified were those who claimed benefits within 30 days after the quit but were found to have good cause for quitting. · Claimants not investigated were those who did not claim benefits within 30 days after the quit. Board Member Healy will file a supplement statement. Sincerely yours,

HOWARD W. HABERMEYER, Chairman. Attachment.

PROVISIONS OF RAILROAD UNEMPLOYMENT INSURANCE ACT

FRAUDULENT CLAIMS Disqualification :

"SEC. 4(a-1). There shall not be considered as a day of unemployment or as a day of sickness, with respect to any employee

(i) any of the seventy-five days beginning with the first day of any registration period with respect to which the Board finds that he knowingly made or aided in making or caused to be made any false or fraudulent statement or claim for the purpose of causing benefits to be paid * * *”. (45 U.S.C.,

1952 ed., § 354(a-1) (i)) Penalties:

"SEC. 9. (a) Any officer or agent of an employer, or any employee representative, or any employee acting in his own behalf, or any person whether or not of the character hereinbefore defined, who shall willfully fail or refuse to make any report or furnish any information required by the Board in the administration of this Act, or who shall knowingly make or aid in making or cause to be made any false or fraudulent statement or report when a statement or report is re quired to be made for the purposes of this Act, or who shall knowingly make or aid in making or cause to be made any false or fraudulent statement or claim for the purpose of causing benefits or other payment to be made or not to be made under this Act, shall be punished by a fine of not more than $10,000 or by imprisonment not exceding one year, or both.” (45 U.S.C., 1952 ed., § 359(a))

LEAVING WORK VOLUNTARILY WITHOUT GOOD CAUSE Disqualification :

"SEC. 4 *** (a-2). There shall not be considered as a day of unemployment, with respect to any employee

“(i) any of the thirty days beginning with the day with respect to which the Board finds that he left work voluntarily without good cause * * *". (45 U.S.C., 1952 ed., § 354 (a-2) (i))

RECOVERY OF AMOUNTS PAID “SEC. 2. * * * (d) If the Board finds that at any time more than the correct amount of benefits has been paid to any individual under this Act or a payment has been made to an individual not entitled thereto (including payments made prior to July 1, 1940) recovery by adjustments in subsequent payments to which such individual is entitled under this Act or any other Act administered by the Board may, except as otherwise provided in this subsection, be made under regulations prescribed by the Board. If such individual dies before recovery is completed, recovery may be made by setoff or adjustments, under regulations prescribed by the Board, in subsequent payments due, under this Act or any other Act administered by the Board to the estate, designee, next of kin, legal representative, or surviving spouse of such individual, with respect to the employment of such individual.

“Adjustments under this subsection may be made either by deductions from subsequent payments or, with respect to payments which are to be made during a lifetime or lifetimes, by subtracting the total amount of benefits paid in excess of the proper amount from the actuarial value, as determined by the Board, of such payments to be made during a lifetime or lifetimes and recertifying such payments on the basis of the reduced actuarial value. In the

latter case recovery shall be deemed to have been completed upon such recertification.

“(f) If (i) benefits are paid to any employee with respect to unemployment or sickness in any registration period, and it is later determined that re. muneration is payable to such employee with respect to any period which includes days in such registration period which had been determined to be days of unemployment or sickness, and (ii) the person or company from which such remuneration is payable has, before payment thereof, notice of the payment of benefits upon the basis of days of unemployment or sickness included in such period, the remuneration so payable shall not be reduced by reason of such benefits but the remuneration so payable, to the extent to which benefits were paid upon the basis of days which had been determined to be days of unemploy, ment or sickness and which are included in the period for which such remuneration is payable, shall be held to be a special fund in trust for the Board. The amount of such special fund shall be paid to the Board and in the collection thereof the Board shall have the same authority, and the same penalties shall apply, as are provided in section 8 of this Act with respect to contributions. The proceeds of such special fund shall be credited to the account. Such benefits, to the extent that they are represented in such a special fund which has been collected by the Board, shall be disregarded for the purposes of subsection (c) of this section” (45 U.S.C., 1952 ed., § 352 (d) and (f)).

STATEMENT OF MR. HEALY

U.S. RAILROAD RETIREMENT BOARD,

Chicago, I11., February 17, 1959. Hon. WAYNE MORSE, Chairman, Subcommittee on Railroad Retirement, Committee on Labor and

Public Welfare, U.S. Senate, Washington, D.C. DEAR SENATOR MORSE: The supplemental statement by me, referred to in Mr. Habermeyer's communication to you, dated February 13, follows:

In my appearance before your committee on February 9, and with your permission, I summarized results of checks by field representatives of the Board for possible employment on days claimed as idle by claimants for unemployment insurance benefits under the Railroad Unemployment Insurance Act during period July 1, 1956, and September 30, 1958, showing that, as of December 1, 1958, less than 50 percent of the recoverable payments had been recaptured.

In the communication referred to it is stated that "separate records are not kept of amounts determined to be recoverable because the claims were fraudulent or of the amounts of such benefits which are ultimately recovered.” And, in the table, on page 4, it is shown that for a selected 4-year period a total of $5,759,664 in unemployment insurance benefits were deemed to be recoverable and of that amount $5,113,956 had been recaptured.

As the report states, that is the record of the total amount of benefits held to be recoverable and includes, as well as fraud, clerical and administrative errors, benefit rate adjustments, pay for time lost, etc.

A statement compiled by the Bureau of Unemployment and Sickness Insurance, dated February 13, shows that in the last 8 fiscal years, in 59,641 cases checked for employment on days claimed as idle, 11,990 cases of recoverable payments were found, aggregating $1,294,552.

As of December 31, 1958, the accounts receivable for recovery of unemployment insurance benefits stood around $620,000, including, of course, all items. However, audits of four regions in 1957–Atlanta, New York, Kansas City, and Dallas-revealed that in accounts receivable aggregating $442,252 a total of $365,405, or 83 percent, involved fraudulent claims and payments.

Since the accounts receivable for unemployment insurance benefits on December 31, 1958, was around $620,000, 83 percent of the sum or around $514,600 would be reasonably chargeable to fraud. This does not include (nor does the table referred to on p. 4 of the Board's report of February 13), a total of $140,385 in recoveries of unemployment insurance payments that were actually waived, for one reason or another during the 8 fiscal years' period, 1950–51 through 1957–58.

The Board's report shows benefits paid in the fiscal year 1957-58 to employees who were discharged or left work voluntarily.

In October and November 1958, the Board's Director of Research, at my request, prepared some estimates of the ratio of such benefits to the total unemployment insurance payments which I now respectfully offer for your consideration :

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Total, selected reasons....
Percent selected reasons to total unemployment insurance payments.

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Very truly yours,

THOMAS M. HEALY. Senator MORSE. Mr. Harper. Mr. HARPER. As to the recoveries, Mr. Healy's statement is incomplete because it does not include what yet may be recovered. We have the right to recover, both under the unemployment insurance plan for future periods of unemployment, and we similarly have the authority to recover from any railroad retirement benefits that that man is entitled to. So that his figures, as to the recoveries to date, is an incomplete statement and does not properly picture the situation.

Senator MORSE. Well, I am going to close this discussion at this point, unless my colleagues want to say something more, subject to this notice to the witnesses for the brotherhoods, that I hope the witnesses for the brotherhoods, and following them the witnesses for the carriers, will help us in regard to this matter. And I also would like to suggest to the brotherhoods that they be prepared to tell this committee what steps they take within the brotherhoods for self-policing. We hear a great deal these days about labor wanting an opportunity to keep its own house in order, and I am strong for giving them every possible opportunity. However, if the facts bear out Mr. Healy even in part, I think the brotherhoods have a burden of coming forward and showing this committee, that if they seek further benefits in this bill, that they also are setting up their own procedures for policing their own membership from seeking to emasculate their own funds. If I were a member of the brotherhoods, I would be disturbed if evidence was presented that would stand up under analysis that there were members of the brotherhood that were guilty of this kind of pickpocketing against the other members. That is what it adds up to; anyone who gets by with a fradulent claim is just stealing from the other members of the brotherhood who have an interest in the fund. As I say, if I were a member of such a brotherhood, I would say to my grand-lodge officer “What are you going to do about ?" Therefore I request, as chairman of the subcommittee, that the witnesses for the brotherhoods come forward and tell the subcommittee what they are doing about it.

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Mr. HARPER. Let me say for the record, Mr. Chairman, and I say this without any qualification at all, the railroad brotherhoods do not want any crooked payments, they do not want any invalid claims paid, and they are constantly alert to the necessity of keeping out fraudulent claims. And I want to say, and let my position be understood, certainly, no one should understand that I am here arguing in favor of the cheaters and the racketeers and the thieves who get benefits unlawfully from our Board...

Senator MORSE. Mr. Harper, let the record be perfectly clear I did not imply that you were, nor did I imply that the brotherhoods want to dispel the fraud. But I know human nature, and I know that sometimes the leaders of labor have a little tendency to rest on their laurels and when a job needs to be done sometimes it is not done. We are entitled in this public record to have the brotherhood officials come forward and tell whether or not they are on the job on this matter-after it has been raised in the previous hearing of another year-or whether they have been resting on their laurels. It is just that simple with me.

Senator Cooper.

Senator COOPER. I did not hear the testimony at the beginning of this hearing so—

Senator MORSE. We are in the same position as last year. It was as helpful as it was last year, but the job is still going to be before the subcommittee, to sift it out.

Gentlemen, thank you very much.

Mr. HARPER. Let me say something, if you please, about the jail situation. Let me make it clear that the example that Mr. Healy cited, that a man was not paid unemployment benefits while he was in jail, he was in jail during the part of the benefit year, and for the part that he was not in jail he was paid these benefits.

I have been on the Board 9 years, and I never heard of even the kind of a case that he mentioned here until he mentioned it. And I think maybe, perhaps, it is the only one that he knows of because he repeatedly gives the same illustration. Now if we were going to fix an unemployment system based on the unusual, the ridiculous, the different situation, it would take us a lot of money, it would cost a lot of money.

Now as to maternity benefits, he cited an example where a lady became pregnant twice in 10 months. Now the makers and framers

Senator MORSE. You are wrong in your figures, he said "a year."

Mr. HARPER. But at any rate, that is an unusual situation, and I do not believe that the framers of the law fixed the provisions of our act to take care of a situation of that kind. And under the circumstances I do not see how the Board could keep from paying if the facts as he related them were true, because being pregnant twice, she was entitled to benefits twice. And I say again that that is the unusual.

It seems to me that in discussing a bill of this kind we ought to take the usual and commonplace, the situation which obtains in the

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